Author Topic: LC - end of Quarter effect  (Read 18473 times)

rawraw

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Re: LC - end of Quarter effect
« Reply #15 on: December 29, 2014, 04:15:58 PM »
Fred they are the 10th largest bank in the U.S.A they don't need to be transparent anymore. Awesome post though!
I don't know by which metric you are using, but I doubt that ha ha.

Stock valuation?
There are like 4,000 banks in the USA -- very few of which are publicly traded. LC is more like a mortgage broker than a bank.

hoggy1

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Re: LC - end of Quarter effect
« Reply #16 on: December 30, 2014, 11:13:53 AM »
As much as I generally hate class action lawsuits and the lawyers who pursue them ...

I'll guess that Bruiser and those who share this opinion have never been involved in a class action lawsuit? I spent almost 6 years as the only named plaintiff suing General Electric in a class action of 40,000 members for fraud, deceptive trade practices, breach of contract. It is a very long and interesting story so let me see if I can summarize.

Here is the normal bad wrap class action (CA) attorneys are subject to:
A) You only hear on the news about CAs won by the plaintiff (A court has to "Certify" a CA meet stiff requirement - you don't just roll up in front of a jury)
B) One class certification requirement is that redress is not possible by any other means (i.e. damages are too small for any individual plaintiff to seek relief on their own)
C) The poor defendant reluctantly agreed to settle for x million dollars without admitting any wrongdoing.
D) The plaintiff attorneys will receive y million dollars and the class member each receive a coupon to purchase more of the defendants products (scum suckers)

The facts of the matter are:
A) Most class members never knew and never would have known they had been ripped off had it not been for CA attorneys willing to take hard cases on contingency
B) If the case is lost, no one (public or class members) are ever likely to know the suit was brought (no one sends a thank you card with $5 to thank them for fighting the good fight)
C) No one has anything invested in the outcome except the attorneys (I had 5 attorneys at 3 law firms who invested $1.4million in billable hours over 5 years)
D) Class Certification is 4/5ths the hurdle - if the court certifies the action there is more than a little smoke with this fire ( I certified a national CA against GE in state district court)
E) All class actions over $5million are now removed to federal court and are no longer heard in state courts - http://www.bna.com/removal-under-the-class-action-fairness-act/

BOTTOM LINE - Class Action law is the only thing that keeps any business honest and even then there's loophole - the total amount must be material even though we already know individual class members claims must be small. So there is a simple formula for making large amounts of money unlawfully but for which the law provides no remedy: steal a very small amount of money from all your customers with as many different schemes as you can conjure and change the contract language every month. (All class members must have been subjected to exactly the same course of treatment)
« Last Edit: December 30, 2014, 01:47:20 PM by hoggy1 »
Steve

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Re: LC - end of Quarter effect
« Reply #17 on: January 02, 2015, 10:30:07 PM »
I actually do appreciate the effect that class action suits have on keeping businesses honest.  I guess I was more lamenting the fact that they are even necessary....I would much prefer a business to just behave ethically to start with.  It is lamentable that most of the proceeds from a victorious case usually seem to end up going to the lawyers, but I do realize that it costs money for them to take it on to start with. 

I expected to see a bunch of "not yet issued" notes issue today, but I only had 2 issues.  I'm wondering if they now don't appear issued in our accounts until after WebBank gets their couple of days of interest and then the note is transferred to me?   So maybe the avalanche of issues will begin Tuesday or Wednesday of next week?

Silverstorm

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Re: LC - end of Quarter effect
« Reply #18 on: January 03, 2015, 12:09:19 AM »
I expected to see a bunch of "not yet issued" notes issue today, but I only had 2 issues.  I'm wondering if they now don't appear issued in our accounts until after WebBank gets their couple of days of interest and then the note is transferred to me?   So maybe the avalanche of issues will begin Tuesday or Wednesday of next week?

After reading this thread, I expected the same, but didn't have anything issue.  I'm quite new, so I haven't seen the previous quarter boundaries.  Several of my notes show less than a day left, so will those expire and return my investment?  Will they issue anyway, even though the "time left" on the Order History page shows only a few hours remaining?

rawraw

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Re: LC - end of Quarter effect
« Reply #19 on: January 03, 2015, 05:45:56 AM »
As much as I generally hate class action lawsuits and the lawyers who pursue them ...

I'll guess that Bruiser and those who share this opinion have never been involved in a class action lawsuit? I spent almost 6 years as the only named plaintiff suing General Electric in a class action of 40,000 members for fraud, deceptive trade practices, breach of contract. It is a very long and interesting story so let me see if I can summarize.

Here is the normal bad wrap class action (CA) attorneys are subject to:
A) You only hear on the news about CAs won by the plaintiff (A court has to "Certify" a CA meet stiff requirement - you don't just roll up in front of a jury)
B) One class certification requirement is that redress is not possible by any other means (i.e. damages are too small for any individual plaintiff to seek relief on their own)
C) The poor defendant reluctantly agreed to settle for x million dollars without admitting any wrongdoing.
D) The plaintiff attorneys will receive y million dollars and the class member each receive a coupon to purchase more of the defendants products (scum suckers)

The facts of the matter are:
A) Most class members never knew and never would have known they had been ripped off had it not been for CA attorneys willing to take hard cases on contingency
B) If the case is lost, no one (public or class members) are ever likely to know the suit was brought (no one sends a thank you card with $5 to thank them for fighting the good fight)
C) No one has anything invested in the outcome except the attorneys (I had 5 attorneys at 3 law firms who invested $1.4million in billable hours over 5 years)
D) Class Certification is 4/5ths the hurdle - if the court certifies the action there is more than a little smoke with this fire ( I certified a national CA against GE in state district court)
E) All class actions over $5million are now removed to federal court and are no longer heard in state courts - http://www.bna.com/removal-under-the-class-action-fairness-act/

BOTTOM LINE - Class Action law is the only thing that keeps any business honest and even then there's loophole - the total amount must be material even though we already know individual class members claims must be small. So there is a simple formula for making large amounts of money unlawfully but for which the law provides no remedy: steal a very small amount of money from all your customers with as many different schemes as you can conjure and change the contract language every month. (All class members must have been subjected to exactly the same course of treatment)
Well Core definitely knows who you are now lol

mchu168

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Re: LC - end of Quarter effect
« Reply #20 on: January 03, 2015, 08:53:43 AM »
This is interesting data and confirms what we all have observed.  I think in a class action lawsuit some group of people has to harmed.  Managing growth and earnings in my opinion is good for the stock and doesn't harm the investors on the platform.

hoggy1

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Re: LC - end of Quarter effect
« Reply #21 on: January 03, 2015, 03:22:42 PM »
Well Core definitely knows who you are now lol

Anyone know where Core is? Last post Dec 22. Must be off at the in-laws for the holidays with turkey and cookies but no internet connection.
« Last Edit: January 03, 2015, 03:26:32 PM by hoggy1 »
Steve

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Re: LC - end of Quarter effect
« Reply #22 on: January 06, 2015, 11:34:22 AM »
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays.  I did make a deposit in December, so it's not all from re-investments.  Anyway, about 1/3 of what was tied up issued this morning.  I suppose there will be big days for the rest of the week.  I guess the notes don't reflect as issued to us until WebBank has earned their interest on the first two business days.  So they were probably really issued on Friday (first business day of year) and then transferred to us today.  WebBank earned 4 days of interest on our tied up money.  Most of this money was tied up for me since mid December earning nothing.  I don't know how anyone can say that we investors aren't suffering "losses" or "damages" because of the way Lending Club is doing business.  I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Yes, Lending Club has a right to manage growth, but you don't manage growth by stockpiling orders at the end of one quarter to fill in the next quarter.  You manage growth by turning on or off advertising or by raising or lowering credit standards, etc.  But business should still flow in as it happens.  There is a difference between management and manipulation.

thezfunk

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Re: LC - end of Quarter effect
« Reply #23 on: January 06, 2015, 11:55:04 AM »
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays.  I did make a deposit in December, so it's not all from re-investments.  Anyway, about 1/3 of what was tied up issued this morning.  I suppose there will be big days for the rest of the week.  I guess the notes don't reflect as issued to us until WebBank has earned their interest on the first two business days.  So they were probably really issued on Friday (first business day of year) and then transferred to us today.  WebBank earned 4 days of interest on our tied up money.  Most of this money was tied up for me since mid December earning nothing.  I don't know how anyone can say that we investors aren't suffering "losses" or "damages" because of the way Lending Club is doing business.  I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Yes, Lending Club has a right to manage growth, but you don't manage growth by stockpiling orders at the end of one quarter to fill in the next quarter.  You manage growth by turning on or off advertising or by raising or lowering credit standards, etc.  But business should still flow in as it happens.  There is a difference between management and manipulation.

Yeah, I don't see them able to keep these shenanigans going.  One of the LendIt videos I watched had one of the executives of one of the lending platforms opin about the future with mobile loans being requested and filled in minutes, on the go, to enable a big purchase.  How does that happen when Lending Club holds our money for weeks at a time before issuing.

mchu168

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Re: LC - end of Quarter effect
« Reply #24 on: January 06, 2015, 01:10:26 PM »
Yes, Lending Club has a right to manage growth, but you don't manage growth by stockpiling orders at the end of one quarter to fill in the next quarter.  You manage growth by turning on or off advertising or by raising or lowering credit standards, etc.  But business should still flow in as it happens.  There is a difference between management and manipulation.

Every company "manipulates" bookings, shipments, etc to smooth out quarters.  I've seen this from inside public companies in sales and finance roles and as a fundamental stock analyst. The difference between management and manipulation is in name only.  I don't think any of this illegal by the way, rather this is what investors want.  As a company, investors do not want to see volatile earnings.  Unpredictable, volatile earnings are the surest way to get a low multiple for you stock.

Furthermore, the day LC is unable to smooth growth due to overwhelming demand for loans is the day I don't want to invest on the platform.  When loan supply outstrips demand for whatever reason (rising risk of recession, low return potential compared to other yielding assets etc), I'll likely be pulling money out anyways.  Plus, what kind of returns do you really expect to get on your cash for 4 days?  10yr is yielding less than 2% and they probably they have the money sitting in money market yielding almost nothing, so I don't think LC or Web Bank are profiting from your funds. 

This is really a non-issue and there's really no reason to make a big deal about it imho.  If you really hate to see dead money for a few days, just withdraw cash in the last week or the month or quarter. 

rawraw

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Re: LC - end of Quarter effect
« Reply #25 on: January 06, 2015, 01:24:23 PM »
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays.  I did make a deposit in December, so it's not all from re-investments.  Anyway, about 1/3 of what was tied up issued this morning.  I suppose there will be big days for the rest of the week.  I guess the notes don't reflect as issued to us until WebBank has earned their interest on the first two business days.  So they were probably really issued on Friday (first business day of year) and then transferred to us today.  WebBank earned 4 days of interest on our tied up money.  Most of this money was tied up for me since mid December earning nothing.  I don't know how anyone can say that we investors aren't suffering "losses" or "damages" because of the way Lending Club is doing business.  I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Yes, Lending Club has a right to manage growth, but you don't manage growth by stockpiling orders at the end of one quarter to fill in the next quarter.  You manage growth by turning on or off advertising or by raising or lowering credit standards, etc.  But business should still flow in as it happens.  There is a difference between management and manipulation.

Yeah, I don't see them able to keep these shenanigans going.  One of the LendIt videos I watched had one of the executives of one of the lending platforms opin about the future with mobile loans being requested and filled in minutes, on the go, to enable a big purchase.  How does that happen when Lending Club holds our money for weeks at a time before issuing.
I've also been waiting for a P2P/credit card hybrid.  Where you can purchase like a credit card but it converts into installment note if there is investor demand.

Fred93

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Re: LC - end of Quarter effect
« Reply #26 on: January 06, 2015, 02:10:32 PM »
Notes are finally starting to issue for this quarter!  I had almost 10% of my account value tied up in "not yet issued" notes through the Holidays. ...

 I don't want them to get sued, but I do want them to change their end of quarter practice and issue loans as quickly as possible.  And I want that both as a investor in notes and as a shareholder in the company.

Tell them so!

TonySaunders

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Re: LC - end of Quarter effect
« Reply #27 on: January 06, 2015, 03:47:49 PM »
Humans are wired to suspect conspiracy when things look strange. In reality these kinds of things are often just the hiccups of procedure and resources. For example: What if the same employees who process loans are required to spend a few days at the end of each quarter filing reports about the loans they processed? I just made that up, but suppose it's an unavoidable thing... like it's required by the SEC. I would expect disruption at the end of each quarter, because they get super busy with the extra demand on their time. The disruption would manifest in various unpredictable outcomes with no particular rhyme or reason, and it's not a conspiracy, just a quirk of procedure.

Or more likely for December, suppose 50% of LC employees take the holidays off? (Where I work, it's like 80%.) I wouldn't expect their loan processing to be on-the-ball in December, ever.

Fred93

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Re: LC - end of Quarter effect
« Reply #28 on: January 06, 2015, 04:57:04 PM »
What if the same employees who process loans are required to spend a few days at the end of each quarter filing reports about the loans they processed? I just made that up, but suppose it's an unavoidable thing...

Doesn't fit the data.  Its more than a couple of days.  It has been a couple of weeks a few times, and in December was more like the whole month.


Quote
Or more likely for December, suppose 50% of LC employees take the holidays off? (Where I work, it's like 80%.) I wouldn't expect their loan processing to be on-the-ball in December, ever.

But it wasn't just December.  Was also June and September. 

TonySaunders

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Re: LC - end of Quarter effect
« Reply #29 on: January 06, 2015, 05:59:28 PM »
What if the same employees who process loans are required to spend a few days at the end of each quarter filing reports about the loans they processed? I just made that up, but suppose it's an unavoidable thing...

Doesn't fit the data.  Its more than a couple of days.  It has been a couple of weeks a few times, and in December was more like the whole month.


Quote
Or more likely for December, suppose 50% of LC employees take the holidays off? (Where I work, it's like 80%.) I wouldn't expect their loan processing to be on-the-ball in December, ever.

But it wasn't just December.  Was also June and September.

You are right that my incredibly arbitrary examples do not individually fit your very specific and concrete observations. I wasn't suggesting that my hypothetical musings were the actual explanations, just examples of the kind of procedural circumstance that can innocently lead to these kinds of outcomes. In reality, there's probably a combination of several things... so I would never expect to be able to deduce a single cause anyhow (neither should you).

EDIT: One thing I'm suggesting is that we shouldn't assume it's a conspiracy to bolster LC's business interests.
« Last Edit: January 06, 2015, 06:01:38 PM by TonySaunders »